Observations focused on the problems of an underdeveloped country, Venezuela, with some serendipity about the world (orchids, techs, science, investments, politics) at large. A famous Venezuelan, Juan Pablo Perez Alfonzo, referred to oil as the devil's excrement. For countries, easy wealth appears indeed to be the sure path to failure. Venezuela might be a clear example of that.

Archive for July, 2010

(The bad thing about this Government is that one always expects the worst and one is always right)

While Venezuela’s economy continues to show distortions in basically every parameter of the economy, I never ceases to amaze me how little urgency the Government feels about fixing those problems. The last example of this is the foreign exchange system set up by the Venezuelan Central Bank. It has now been three months since the swap market was banned and about two since the Sitme was created and everyone agrees it is a dysfunctional system. Then El Nacional says that the Government will tweak this and that, create a New Market for public paper, allow the sale of other dollar denominated bonds and blah, blah, blah. But what impressed me the most was the ending: In two months.

So, you ste up a system, it does not work well and you are going to improve it in two months. What if what you do does not help either? Will they wait until January to fix it?

Absolutely nobody runs a business or a Government this way. If you detect a significant problem (shortages, lower economic activity, stupid policies, are important problems) you fix it today, or as soon as it can be implemented. Nothing that is being proposed can not be done by Monday.

But this represents a style. Almost a year ago, the first week in September 2009, The Government announced that it would announce 64 economic measures to get the economy growing. Well, I stopped counting at seven measures, because no more were announced, since then we have had four quarters if shrinking GDP and tye Government feels no urgency to change he slope, other than announce that next quarter GDP will actually go up YoY. Except it has been saying that for six quarters and nothing doing…

Some believe this simply reflects disagreements among Government officials. After all, Armando Leon, one of the few trained economists at the Venezuelan Central Bank said the other day Sitme is working fine, while the President of the Central Bank, a Mathematician, understands it does not work. Never thought I would agree with Merentes so much.

And this slowness at decision making is killing Venezuela and its economy. The Government has known for two years how putrid Pudreval was and but did not even want to do anything about it. Next week Venezuela will have to pay 1.5 billion dollars if a maturing bond and apparently two weeks ago the Government had not even thought about how it would go about paying it.

Running a country like this is simply unsafe. For a Government that switches political tactics at the speed of light and in unison according to what polls are saying, it is remarkable the tortoise speed they have at economic decision making.

Running the Venezuelan economy at this speed is certainly very unsafe.

If people had thought that the Pudreval affair, involving the discovery of more than 130,000 tons of rotten food all around the country, was a demonstration of the corruption and inefficiency levels of the Chavez Government, the publication of Pdvsa’ s internal audit on PDVAL in today’s El Nacional and Reporte de la Economia, reveals that the whole affair is orders of magnitude larger than anyone could have ever imagined, with food never arriving in the country, PDVSA incurring in debt for food that never arrived and money advanced to bankrupt coops in Argentina.

The numbers revealed by the internal audit are simply staggering. It says that only 25% of the food purchased by Pdvsa ever arrived in Venezuela. Specifically, in 2008, Pdvsa purchased over one million Tons of food of which only 266 thousand Tons ever got to the country. The
cost of the one million Tons of food was 2.2 billion dollars for the period covered by the audit, implying over US$ 1.5 billion just “dissapeared”. Even more incredible, of the food that did arrive, only 54% was actually passed on to the Pdval distribution network, with the remainder found still at storage at the time of the audit. The report crudely concludes “the effective distribution of food was less han 14% of the total purchased and paid for, incurring in many cases with elevated costs of acquisition and shipping and despite this, they were not managed adequately nor distributed in efficient fashion to the Venezuelan population”

These high costs involved purchasing through only ten companies, six of which were inrermediaries, some of these were from Argentina and Brazil only because this was supposed to make things cheaper, not more expensive as it turned out at the end.

Separately, Deputies from the Podemos party have been carrying out their independent investigation of Pdval. They have determined that Pdvsa purchase food in the amount of eight billion us dollars total in 2008 and 2009. Pdval used at least 26 companies owned by Venezuelans, some military, who would buy the food abroad and the resell it at a higher price to other companies of their property which would then in turn sell it to Pdvsa at a higher price. In many cases lower quality food was passed on as higher quality in order to charge artificially high prices.

Thus, the order of magnitude of the embezzlement in Pdval is much larger than anyone thought. Food was purchased at the official rate of exchange of Bs. 2.15 per US$ but for a large fraction, it never even arrived in the country for a clean 100% gain or rip off. In the case where the food did arrive in many cases, it was overpriced and of lower quality, with Venezuelan intermediaries assigned some of these purchases by their buddies in Pdvsa (audit dixit) And even then, the food never arrived at the intended recipients.

The audit also reports higher prices per Ton for product than was commonly available in world markets, advancing US100 million to an Argentinean milk coop that was almost bankrupt with no guarantees, financing the import of food and clearly describes how a joint committee of Bariven and Cubans decided how much to import. That is called defending sovereingty under the revolution.

Despite the audit in 2008 and denunciations since that year of rotten food in storage, neither the authorities at Pdvsa, nor the Comptroller, nor the National Assembky did anything to investigate or bring those responsible to Justice. That alone is punished by Venezuelan Law. But beyond that, the Pudreval case is anoher incredible case of corruption and inefficiency, comparable to the sale of bonds into the swap market in size and which gives even more significance and meaning to the word robolution.

And there are other crimes associated, rotten and expired food has been sold as if they were fine in an attempt to to make a profit without regards or respect for the well being of Venezuelans. A Government that claims to care about the people has not even bothered with this. The robolution is indeed cynical and heartless, when it is likely to be the poor that could be affected the most by this.

Today, only three people have been detained for this case (one of which retains his seat as a Director of Pdvsa and collects salary every month), the National Assembly refuses to investigate it, the Comptroller says the opposition has overkilled the case and those truly responsible for the whole rotten mess remain in their positions of power. Impunity rules in the robolution. The Justice system only persecutes the enemies of the Government, while those raping the country roam free.

A blog is only as good as its readers as demonstrated by the pictures below sent by JG, who took the trouble to go visit Playa Los Angeles and took pictures with his cell phone from approximate the same angles as those of FARC guerrilla member Carlos Marin Guarin, also known as “Pablito” and his girlfriend. The pictures speak for themselves. Thanks JG!

When Bruni noted in her blog Cuentos Intrascendentes, that to her the beach in which the FARC guerrilla “couple” was photographed, as presented by the Colombian Government at the OAS meeting, enjoying a beer, was Playa Los Angeles in Vargas, I took a 10 second glance at the pictures and knew that it certainly was.

Contrast that with Venezuela’s Ambassador to the OAS Roy Chaderton, he of the oligarchic look, the polite manners, the educated style, even if he looked a little bit drunk or high, Chaderton, who is more traveled than me, having sucked off Venezuela’s diplomatic tit for some forty years, suggested that the FARC guerrillero was not in Venezuela, but in Santa Marta, Colombia, where I have never been. In classic liar attitude, which Chavismo has accustomed us to, he even dared and very daringly suggested that the beer was not even Polar, but some Colombian brew or another.

Well Roy, it is clear that you don’t even know where Playa Pantaleta (Panty Beach) or Playa Los Angeles is. Maybe you have been next door to both, at Club Camuri Grande, an oligarchic enclave,, but it is likely you never bothered to look to the right (Pantaleta) or to the left (Los Angeles). You are an oligarch for all times, the IVth. the Vth. and if we don’t stop you, you are likely to try to sneak yourself into the VIth.. But I will try to be there reminding everyone of the Esbirros and collaborators of the Vth.

But take a look Roy at the pictures of the guerrillero, Carlos Marin Guarin, as presented by Hoyos, we will look at his girlfriend later:

anyone that has ever been close to Playa Los Angeles knows that this is looking West from it. In fact, you can see the building right outside Puerto Azul whose name is Aguja Azul. Take a look at the map Roy:

See Roy, that square on the bottom right? That is where the guerrillero, Carlos Marin Guarin, is standing, that is Playa Los Angeles. The building you can see in the distance is the one called Aguja Azul, next to Puerto Azul, which I have encircled on the left. Aguja Azul is the one right north of the circle, which is hard to see in the google map. (Yes Roy, encircled in a circle, that is the way it works!)

In fact, if we look at the “guerrillera” or at the Guerrillero’s girlfriend, that I don’t know the precise details. This picture was taken by having Carlos turn around, face East, rather than West:

you can see the wall that separates you, Roy, at Camuri, from the people, at Playa Los Angeles. In fact, if you look on the left upper side of the picture:

That Roy, you should recognize, that is the structure under which boats are kept at Club Camuri Grande which I have indicated with a triangle in the map, where I am sure you have been, but those “palitos” to calm your nerves before the OAS meeting did not help.

By the way, Roy, if you are wondering where Playa Pantaleta is, (That name should intrigue any man worth his salt!), it’s on the other side behind the boats, past Camuri. On the right of the map, beyond the river.

Take a look next time you come to Venezuela, something you seldom do these days, you don’t like to mix with the “parvenu“.

But in any case, it took me a minute (or less) to figure all this out Roy, so much for “intelligence”, Cuban or otherwise. The robolution seems to have very little of it.

As for you Roy, well, you certainly look rather silly, just being benign…

(Note and picture added:

Many people have noted that I circled the wrong building and they are correct, I changed the text to reflect that, but here is the correct building:

The correct building es Aguja Azul the one above to the rght, which is almost vertical and leaves a shadow)

(If those pictures had been taken here, we would have scenery like this)

When Brazilian Presidential candidate Jose Serra decided to make Hugo Chavez a campaign issue, coming out and saying that even the trees in the Amazon jungle knows that the FARC seeks refuge in Venezuela, he may have begun the end of this chapter for Hugo. Because Serra is still ahead in the polls and neither Lula nor candidate Dilma Rousseff want this to become a campaign issue, like it did in Mexico and Colombia.In fact, this is not the first time Serra invokes Chavez or Iran to note the sympathy of Lula’s PT party.

Thus, I can imagine today Hugo Chavez is getting calls from Lula asking to quickly restore relations with Colombia and do something to show there is no FARC in Venezuela. And even without the calls, the thought that Brazil may go to the other side and become another country to antagonize, should be sufficient to give Hugo nightmares.

And it makes you wonder about Uribe’s intentions when he began his accusations. While people have given the whole Uribe-Santos rift or not rift a lot of thought, I ahve not written about it, because I know these guys can be simply Machiavellic and there can be no simple interpretation to what has happened. To me, Uribe and Santos had a plan, much like they did when they “welcomed” Hugo into rescuing Ingrid Betancourt. Once he wad drawn in, they played him like a fiddle and we all know how bad Hugo ended up looking in that affair.

The same is happening here, whether the Brazilian elections are part of it or not. In the end, the video by Spanish reporters shows Venezuelan military telling them how many guerrilla camps are there and where they are and it is not just two camps, it’s like “here, here, here, here and here too”. So, Serra is right, even the trees and the soldiers in the Llanos know there are FARC guerrillas in Venezuela.

Thus, I predict that events will accelerate in the next few days to bring the whole Venezuelan invasion circus to an end, so that Rousseff can extricate herself from this issue before Serra milks it to death.And Chavez will be left with no issue and still losing popularity and not having his last Uribe jump in the polls.

Oh yeah! And Cardinal Urosa will be going tomorrow to the National Assembly. Will Chavez feel surrounded for once?

So, Chavez will not be going to Cuba, just in case Colombia attacks. Funny thing is that I have yet to hear Colombia mobilizing anything to the border, in contrast to “you know who” who mobilized and is ready to cut off oil supplies to the US if Colombia attacks.

And funny man Rafael Ramirez tells us from Havana, that he will follow orders.

Well, two questions: One, could he say he would not follow orders and stay in his job? Two: What the hell is he doing in Havana?

Seriously, with so many problems here, why is Ramirez in Cuba? PDVSA’s oil production is going down, food shows up rotten everywhere, there are National Assembly elections in September and everyone wants to get rid of him, and he spends the weekend in Cuba?

And pardon me Rafael, but you know a lot about producing less oil, a suprise would be that you are ready to increase production, not lower it, you do that routinely.

And in a not so routine action, after intervening the trout farm in Merida, the Government took a gigantic step and regulated the price of octopus at Bs. 15 per kilo. that’s Bs. 6.8 per kilo, which nobody knows how much it is in foreign currency, because octopus is not on the accountant’s list, so its hard to tell whether you should divide by Bs. 2.6, Bs. 4.3, Bs. 5.3 (SITME) or the mystery price nobody wants to talk about. Paul the octopus who predicted Spain would win the world soccer cup was not worried, he has no way of figuring out if this endangers him or not.

But really, how much octopus do people eat in the LLanos? Go figure. I guess if you want to control inflation you have to go all the way down to micromanage octopus prices. Funny, I would have thought squid was more important. It’s tastier…

But it is not clear who sets priorities.

Take the TSJ (Supreme Court) for example. Despite Art. 28th. of the Constitution which says you should have access to all information of relevance, the Supreme Court , says: “On, no, but not our salaries” and even if you don’t want to know our salaries, you have to say why you want the information and how you plan to use it. Imagine something like this:

“I want PDVAL to give me data about imports and all invoices, so that I can prove so and so is corrupt and paid so and so commissions to so and so, denounce him in front of the Comproller and make him go to jail”

Sure guys, wait for lines to form filling out the forms. By the way, is it true Supreme Court Judges make four times Chavez’ salary?I don’t want to know, just wondering.

And in another weird episode of this Bolibanarian democracy, the Peoples’ Ombudsman threatened those (The people!) that denounce false things with jail. The case was that of some neighbors that denounced that the water in the Pao-Caniche dam in Carabobo was not adequate. Her office went and checked and found it fine, which then it meant that that whole thing was politically motivated.

I wonder what she thinks about Chavez saying that Colombia may invade us? This is the third or fourth time Chavez has said this was going to happen. When does it become false? Don’t people get edgy when Chavez says this? What’s the difference? After all, Chavez has privileged information, but it takes a certain level of expertise to know if water quality is good or not.

After eight years of blogging, I think I am entitled to a very personal rant. I have received a few comments about me noting that Chavez broke relations with Colombia while meeting with Maradona, most of them critical of even including Maradona in the post, or in the way which I referred to him.

Sorry people, screw Maradona, he has no right standing next to any Venezuelan President, least of all to have the dignity to be present at a major announcement about Venezuelan politics, whether I agree with it or not. (I disagree, because Chavez is just playing for Chavez, not for Venezuela)

Maradona is and should be nobody’s hero. Not to the Venezuelan President, nor to the Venezuelan people. He is the typical Latin American idiot, who God gave him all this talent and he has screwed up and wasted it all the time, because all he is interested in is himself. And if this reminds you of Hugo Chavez, you are right, he had the goodwill to do so much and the money came right after it and he did nothing but waste the opportunity, just like Maradona.

Come on! God even threw in his hand to help him! Contrast that with those that are always asking God to even give them a hint he exists!

And since we are on the subject, let me tell you a couple of stories of three true heroes, one long, one short. (Yes, that is two, but a third hero of mine is involved)

In the long story, there was a much-maligned President of Venezuela, whose name was Carlos Andres Perez (CAP). Yes, the much despised and screwed up President during the IVth. Republic, which now seems like Nirvana compared to what we are witnessing.

After CAP left office in his first term, he was not loved. Oil prices went down during the last year of his first term, he had to cut the budget and worse, he had to wait ten years to be President again.

It is not easy being a former President in any country…

But then someone created the so called “South Commission” and invited distinguished people from the Southern hemisphere, who would meet to discuss the important problems of the world. Someone suggested Carlos Andres Perez and given his status as an ex-President, he rapidly accepted.

Separately, Abdus Salam, the Physics Nobel Prize in 1979 for his work on quantum electrodynamics and creator of the ICTP in Trieste, was also invited. Somehow, Salam took a liking to the then energetic Venezuelan politician sitting next to him at meetings and traveling and talking to him. Salam convinced Perez that the only way out of underdevelopment was through science and technology and convinced him that a country like Venezuela should spend 2% of GDP in science and technology.

CAP bought the story. In fact, if my memory serves me right, he went to Trieste a month before his election and promised Salam that he would increase the Science and Technology budget to 2% of GDP. Once elected, CAP even went further: On his first trip abroad he stopped first at Trieste to visit Salam and ratify his promise.

Events conspired against CAP, the Caracazo took place as he was just getting started and he was almost a lame duck before he even got started. He did try to help science and technology. He got a loan from the IDB to fund five areas of priority to the tune of US$ 90 million (Disclaimer: I was involved in this project) and created and funded a number of R&D institutions. But politics (as usual in Venezuela) took over.

The point is that I very much prefer CAP’s hero Abdus Salam than Chavez infatuation with a man, Diego Maradona, who is not precisely an example and represents (to me) the worst qualities of the Latin American idiot. Chavez examples and idols are no heroes’s, and we have to call a spade, a spade. Few of them have any redeeming qualities.

Screw Maradona! My heroes are absolute, not relative. So are my principles. Presidents should lead by example. Politicians should not lead by the most likely way to win an election, but the most honest way to do what is right for the people an set an example. That is why I will never be a good politician.

Which leads me in this rant to my second story. Many years ago when I was in science, another hero of mine, Richard Feynman, died. That day we had a meeting of scientists to discuss mostly irrelevant and mostly innocuous subjects. A brilliant Mathematician and friend, who emigrated many years ago, turned around and told me something like” I can’t believe we are discussing such trivial matters on the day Feynman died, rather than pay tribute to his work and accomplishments”

Those are true heroes that lead by example: Abdus Salam, who went form his farming village in Pakistan to a Nobel Prize and the promotion of science. Richard Feynman, son of inmigrants who would play with equations and bongoes at the same time. Both made full use of their God-given talent.

And, of course, there is my then good friend Gerardo Mendoza, the Mathematician in my story, who I lost track of, but whose values were also absolute and could not be compromised and who is always sorely missed.

Standing next to Diego Marandona, the Argentinean futbol star and coach, President Hugo Chavez broke relations today with Colombia, arguing it was a matter of “dignity”, without referring to the dignity of the company in which he was making the announcement, a totally frivolous and unnecessary event. He has done it before and threatened it many times. In fact, last time, Chavez even threatened to nationalize Colombian companies and the previous time he ordered troops mobilized to the border with Colombia. I am sure he will set up some form of show this time around, telling us how Colombia wants to attack us. Curiously, not a single reply by Venezuela’s Ambassador to the OAS as to the truth of some 87 guerrilla bases that the Colombian Government says are within the borders of Venezuela.

The CNE withdrew its invitation to Colombian observers for the elections on September 26th., which was probably done without consulting with the Board, Chavez put troops on alert at the border and within minutes the National Assembly should condemn Colombia.

Last week when reporting the detention of two Twitteros I expressed my concern that the most worrisome aspect of this threat to free speech by the Chávez Government was the fact that it showed the Chavista Government had sophisticated tools for finding those that express themselves via the Tweeter social network. In particular, the two people detained hail from Ciudad Bolívar and they were quickly found by the investigative police CIPCC and their homes were raided.

Well, maybe I assigned too much intelligence to the Government, as yesterday a very upset Carmen Nares, one of the two people detained, went to the Venezuelan National Assembly to raise hell as to not only the fact that she was detained despite being innocent, but also over the abuses committed during the raid to her home when disk drives, telephones and computers were taken and have yet to be returned. But the worst part is that Ms. Nares, an elementary school teacher who says she is innocent, happens to be a card carrying member of Chávez PSUV party!!!

Thus, Deputy Wilmer Iglesias presented her case to the Assembly, denouncing the deficient judicial system we have and a “national panorama that attempts agaisnt the rights of the citizens to exercize their defense”

Wonder where Deputy Iglesias has been the last few years.

When Ms. Nares was jailed the Head of the investigative police openly threatened all users of social networks in Venezuela when he said that “anyone that spreads any malicious rumor via any media, be it emails, SMS, Twitter, facebook is committing a crime and will have to respond”

Unfortunately he meant the opposition and not the rank and file like Ms. Nares who clearly said that one of the reasons she said nothing publicly at the time is that she is an elementary school teacher still under contract in Ciudad Bolivar, another clear violation of the law which says nobody can be under contract for more than three months, but the revolution is not very good atwith the details, or the big picture for that matter…

The Venezuelan National Assembly reached a new record yesterday when it rejected for the eighth time the request to investigate the case of the rotten food imported by PDVSA, known by now as the Pudreval case.

Many reasons for this, they were busy abusing Cardinal Urosa, they were investigating funding to little known groups by the CIA and condemning the Chilean Senate attempt to violate the country’s sovereignty.

Thus, the Assembly has no time for investigating Pudreval, which also sets a record in that it contains crimes at all stages of the importation of the food, from commissions to the buyers, to the Cuban intermediaries, to the local sellers, to the lease of the containers to the resale of the rotten food. Add human rights violations for selling rotten food to the population and wasting money in importing unnecesary food and you have the biggest multi-billion corruption case in the country’s history.

Pity the Assembly has no time for it. Revolutions have priorities, breaking records is just a side benefit of it.